Photo provided to NBD

May 28 (NBD) -- Chinese electric vehicle startup Reech entered into a joint manufacturing agreement with Chongqing Changan Suzuki Automobile Co., Ltd. on May 24. 

Pursuant to the agreement, Reech's first all-electric SUV, M500, will be mass-produced at Changan Suzuki's second plant in Chongqing, with production slated to begin in the second half of this year.  

"While cooperating with Changan Suzuki, the Shanghai-based startup will press ahead with applying for production qualification," the startup's CEO Ren Yahui told National Business Daily (NBD). 

It is noticeable that the cooperation between Reech and Changan Suzuki is not merely OEM manufacturing, but involves manufacturing resource sharing along the industrial chain. 

While harnessing its own innovation capability in intellectualization and electrification, Reech can leverage Changan Suzuki's rich experience and strong capacity in vehicle manufacturing to guarantee the successful launch of its models. 

And for Changan Suzuki, the partnership with the startup is conducive to revitalizing the idle capacity and enhancing the understanding of the industry dynamics, thereby speeding up the industrial upgrading and development. 

Production at Changan Suzuki's plants has almost come to a standstill since Suzuki Motor pulled out of the Chinese market last year. To alleviate the overcapacity issues of the second plant with an annual capacity of 250,000 cars, Changan Suzuki's parent company Changan Automobile once shunted off the production of the CS85 COUPE, all-electric Eado and other models to the plant. 

Through the partnership with Reech, Changan Suzuki might be able to activate its idle capacity, creating a new revenue stream for and curbing the revenue decline of Changan Automobile. Data shows Changan Automobile reported revenue of around 16 billion yuan (2.3 billion U.S. dollars) for the first quarter of 2019, down 20 percent from a year ago. Net profit for the quarter experienced a year-over-year dive of 250.62 percent to about 2 billion yuan. 

But as Reech's first model is yet to hit the market, it remains unknown how much market share Reech can grab from China's proprietary brands, joint-venture marques and other emerging startups. 

More importantly, "construction of Reech's own production bases is in progress," Ren Yahui said to NBD. Previous media reports said Reech's first manufacturing plant, located in Jiujiang, southeast China's Jiangxi province, has completed the preparatory work including land leveling.

Email: lansuying@nbd.com.cn